Nielsen Cuts 1,600 Jobs

Market Research Giant Cites Continued Integration of Its Operations for Reduction

NEW YORK (AdAge.com) -- Market research powerhouse Nielsen Co. has taken a restructuring charge to cover a headcount reduction of 1,600 in 2009, or less than 5% of its work force, company officials disclosed in a conference call with investors and analysts last week.

Chief Financial Officer Brian West declined on the call March 27 to detail the timing or precise areas of the reductions, which are in addition to the 4,100 announced shortly after the company, formerly known as VNU, was taken private in 2006.

But Mr. West indicated the moves are part of the continuing integration of the company's operations and efforts to grow earnings ahead of revenue, as the company did last year and in the fourth quarter despite a sharp slowdown in the second half.

A Nielsen spokesman said in an e-mail that the majority of notifications regarding the new round of job cuts have already been made, starting last year, and that the cuts are being made globally.

Nielsen, which operates Nielsen Media Research, the Nielsen retail-tracking and consumer-panel business, Nielsen Online and Nielsen Business Media, with titles including Adweek, booked the charge in the fourth quarter, Mr. West said.

"I will tell you that a charge of that magnitude, in this kind of environment, we're going to make sure that's it's reasonable payback, one of which we'll enjoy the benefits of through the course of '09," he said of the upfront accounting charge to pay for the headcount reduction.

He noted that Nielsen increased its bottom line 12.5% in 2008 on 4.5% revenue growth to $5 billion (excluding currency effects), adding that such numbers are possible "through the solid operating leverage that we saw. ... We're very focused on integration productivity. We've shown an ability to deliver it, and as we head into '09 we need it now more than ever."

While Nielsen fared better than many in marketing on both the top and bottom lines last year, neither it nor the rest of the research industry has been immune to the recession. Arbitron last week announced it will lay off more than 100 employees, or 10% of its work force.

Nielsen's revenue rose 1% in the fourth quarter, a sharp deceleration from the 7% growth for the first half.

Hardest hit by the recession was Nielsen Business Media, with revenue down 23% in the fourth quarter and 11% on the year. Nielsen's expositions business also was down 10% in the fourth quarter.

Nielsen Media Research fared far better, with revenue up 10% on the year and 11% in the fourth quarter, with about four points of growth coming from acquisitions. But Mr. West added: "As we head into '09, it's not going to stay that high."

The consumer business, which includes scanner and panel data for package-goods clients, came in flat in the fourth quarter despite two account wins in the second half and an agreement by Nielsen's biggest customer, Procter & Gamble Co., to re-up its contract for five more years.

A bright spot in that business, however, remained media and pricing analytics as marketers upped budgets to gauge the effects of recession. Nielsen's analytics revenues were up 22% for the year, though they slowed to 10% growth in the fourth quarter.

Nielsen Online was another bright spot, albeit with a similar trajectory -- up 16% on the year but only 5% in the fourth quarter.